Quest for a perfect SLA

I recently had a discussion with one of the respected global company that specializes in providing consulting around outsourcing and managing Service Level Agreements. My friend on the other side of the phone passionately tried to convince me why it is important to create SLAs that can tie down every aspect of the service that the outsourced service provider will deliver now or in the future. He cited many examples of how his company helped many customers “win”.


In another setting a debate was set off between CIOs on how they ensure that their service providers deliver what they promise consistently that meets the promise to the business. For more than a year, one of them has been unsuccessfully trying to get a bunch of vendors to come to the table for a discussion on creating effective SLAs. Not that the vendors are shy of the subject but collectively at the same table with multiple CIOs is not a viable proposition.

Service levels matter to everyone, the customer, the provider and the end consumer of the customer; I do not believe that deficiency of service is due to wilful behaviour or mal intent. The exception to this may be in monopolistic scenarios where no incentive exists. When it is relatively easy to switch services or move business to competition, efforts are indeed put in by the provider, the end results may however not be aligned to expectations.

The reasons why SLAs fail could be many ranging from ambiguous definition of service, staff involved in execution not being aware of quality of service expected, lack of skills on the ground, unrealistic expectations, or force majeure conditions to name a few. Irrespective of the reasons, when things do go wrong, contracts come out of the closet again to review the penalties that can be levied or avoided depending on the frame of reference. My belief is that “if-then” motivation will not deliver world class service; i.e. if SLA is met you get paid, if you better the SLA, you collect a bonus, whereas if the SLA is breached, there is a penalty.

SLAs are typically calculated on statistical data which fails to recognize business impact when the service is deficient. Creating complex SLAs that factor in all types of exception conditions makes it readable and enforceable only by lawyers and not CIOs. A SLA should illustrate the intent of partnership between the two (or more) parties. Incremental innovation or improvements are expected as much as occasional failures that could be for any of the reasons listed above. Both parties need to work together towards ensuring that they understand the root causes and work towards prevention of repeated adverse impact.

Unfortunately such behaviour is rarely seen and everyone invests significant resources towards the scripting of a document that covers all bases. End result is that the parties involved split hairs with irrational discussions thereby leaving the spirit of partnership aside. Most successful relationships are based on simple few page documents that capture the intent with the managements investing time in frequent reviews not just when things go wrong, but when they are working too.

Over the years it has been a difficult journey on this path, but it has been worth the effort. The big companies (customer as well as provider) have however yet to learn.

Outsourcing travails

Almost every mid to large size organization now outsources the basic maintenance of desktops, laptops, printers and other end computing devices to service providers under the broad framework of facility management. Some have also given away the tasks of managing servers, backups and networks. As far as I remember, this practice is definitely more than 15 years old, considering that the first time I came across this concept was in the early ‘90s. So by now, one would assume that the vendors and service providers (along with the CIOs), would have fine tuned this basic support activity to a level where it does not require significant management time and attention. However, recent discussions bring out a different story.

Essentially, outsourcing of the basic break-fix and first level support (typically personified as the IT Helpdesk), broadly constitutes a centralized number, email or web based form for users to log their calls. The person at the other end is expected to acknowledge the call, and attempt troubleshooting via phone or remote control of the computing device. If this is not feasible, he’s then supposed to provide desk side support through an Engineer. Track progress of the call until completed, repeat ad infinitum. Sounds simple enough!

Add a dash of best practices, frameworks like ITIL, service level agreements, and periodic reviews—everything should be hunky dory?

As computers get ubiquitous, cheaper, sturdier, and easier to use, the expectation levels have also risen. Today the expectations veer towards near instant resolution, which reflects the high level dependence as well as time pressures that are typical of today’s workplace. Mobility adds to the complexity, while security concerns mount—new and old threats challenge existing solutions, and compliance add to the challenge. To add to this, budgets are shrinking, and attrition is on the rise. So is it fair to expect service levels to sustain and improve, quarter on quarter?

CIOs with reason are right in their expectations from facility management, as this is what the enterprise demands in a hyper competitive environment. On the other hand, service providers have been struggling to rise up to these challenges and seize the opportunity. A few CIOs mentioned that they were reviewing alternatives, even though the contract period was far from over. In these circumstances, root cause analysis points towards many reasons that contribute either singularly or collectively.

Key amongst these factors remain people (See Challenges of an upturn), where service providers did not plan for attrition, with growth coming back; thus the pipeline dried up, and customers saw an adverse impact. If the person exiting is a Project Manager, it can take up to six months to recover. And we are not yet talking about quality of resources on the ground, which is deteriorating slowly and surely. Most new hires were fresh out of institutes, with very limited or no soft skills orientation. Customer service is not just about fixing the problem, but also with respect to addressing the person behind the computer and his downtime.

The second big issue is process compliance, with or without ITIL. Every outsourcing engagement has a plethora of checklists and processes which need to be rigorously followed to ensure success. However, for the person on the ground, this is a distraction, and sometimes seen as policing. Inconsistent data and incomplete checklists lead to increasing grievances with the users.

Weekly, fortnightly or monthly review meetings are at best a post mortem of the issue; instead, daily exception management between the vendor and customer Project Managers is required to ensure that these do not get discussed at the Management table. CIOs need to conduct periodic assessments to remain connected to the process, a practice which also keeps the teams’ focus on deliverables.

ITIL and aligning Business to IT

Earlier this week I attended a seminar titled "ITIL and Aligning Business to IT". I wondered what the connection was and how can ITIL facilitate the nemesis of all CIOs "IT-Business alignment" considering that ITIL has been around for over 20 years and rarely this connection has been made.

Information Technology Infrastructure Library developed in the UK for controlling the chaos in IT services and creating a consistency in what IT does remained a good case study for long until it became obvious to many that there were indeed a few good practices that could be adopted by other IT Organizations to improve their internal ratings with their customers. Consultants created practices, Software organizations started talking about ITIL compliant tools and suddenly a market for ITIL certified professionals began to appear.

Having implemented ITIL practices across two different companies in the last 3 years, I was wondering how the SDIM (Service Delivery Incident Management) and other formalized practices like Change management, Configuration management etc will help create a better business alignment if the underlying technology or solution is not compliant to business requirements or if your customers don't like the way you look.

As the seminar unfolded, we had the vendors' view of how their tools bring you closer to the holy grail and then a consultant from the big consulting organizations presented his perspective. It was but fortunate for me that the subsequent panel discussion between CIOs, the vendor and the consultant had one dropout and thus creating an opening for me to be called upon to fill in the gap. It's becoming a bit irritating to be pulled off the audience onto the stage regularly with no preparation.

So I asked the question to the panel braving brickbats from the audience for asking such a stupid thing.

ITIL provides consistency in service delivery that comprises typically 70-80% of the activity carried out by most IT organizations. It ensures that the experience does not have elements of surprise irrespective of rank and order in the enterprise. ITIL defines everything explicitly and expects commitment to deliver which some IT shops do extremely well and a few even with internal Service Level Agreements (SLA).

The underlying assumptions being that the systems, hardware, networks etc are well crafted and architected, services and service levels promised are in line with expectations and effective usage of these systems by the users, ITIL will create harmonious co-existence between IT and business. There you are !

Now you know how ITIL will help you align IT with business ? No ? Then if you find the answer let me also know.